British banks among world’s biggest lenders to coal industry, report finds

25 November 2013, The Guardian

Three UK banks are among the world’s biggest lenders to the coal-mining industry, despite trumpeting their environmental credentials, a new report has found.

Royal Bank of Scotland, which is majority-owned by UK taxpayers, was by far the biggest of the UK banks involved, providing finance of nearly €5bn (£4bn) to the industry in the last eight years. It ranked as the world’s eighth biggest lender to coal-mining operations, according to a study from a group of non-governmental organisations.

Barclays was the next biggest UK bank on the list, with more than Euros3.5bn in lending, and HSBC – which in 2004 boasted of being the first major company in the UK to go “carbon-neutral” – provided about €2.5bn in finance over the same period.

The report, entitled Banking on Coal: Undermining Our Climate, from organisations including Germany’s Urgewald and the Polish Green Network, found that at least €118bn had been lent globally to coal mining between 2005 and 2013. Despite coal’s position as the most carbon-intensive fossil fuel, lending on coal mining has increased three-fold since 2005, the year the Kyoto protocol came into force.

Heffa Shuecking, director of Urgewald, said: “It’s mind-boggling to see that fewer than two dozen banks from a handful of countries are putting us on a highway to hell when it comes to climate change. Big banks have already showed they can mess up the real economy – now we’re seeing that they can push our climate over the brink.”

RBS’s group policy states: “RBS Group fully supports the transition to a low-carbon economy. We use our position as a global financial services company to lead and support our stakeholders in addressing this critical global challenge. We are engaged in meaningful and positive actions to develop and implement the immediate and long-term investments required.”

Barclays was one of the banks that helped draw up the Equator Principles, which require companies to take environmental risks into account in their lending practices.

HSBC has long campaigned on its green credentials, teaming up with WWF, the Climate Group and others in a $100m “climate partnership” project.

None of the three companies responded to a request for a comment.

The biggest banks lending to coal-mining operations internationally are Citigroup, Morgan Stanley and Bank of America. All three of these banks also have sustainability policies. The authors of the study found that the US, the UK and China collectively account for about 57% of finance provided to coal mining.

Coal has been in the spotlight at the United Nations climate change negotiations this week in Warsaw. The Polish government chose to give a prominent role at the conference to the coal-fired power generation industry, which provides most of the country’s energy, to the consternation of environmental groups and other governments.

An increasing body of research shows that the world cannot burn all of its reserves of coal and other fossil fuels if temperature rises are to be limited to 2C, which scientists regard as the limit of safety, beyond which the effects of global warming are likely to become catastrophic and irreversible. In September, the Intergovernmental Panel on Climate Change published its most comprehensive review yet of the science of climate change, setting out the world’s “carbon budget” of the quantity of greenhouse gases that can be emitted before surpassing the crucial threshold. The budget analysis showed that on current trends, it could be used up within 30 years.

But so far the UN talks have showed little sign of urgency – and some countries have shown signs of backsliding on their existing commitments. Countries are meeting to hammer out some of the details of a proposed new global climate agreement, to be signed in 2015 and come into force from 2020. But Japan has announced that, in the wake of the Fukushima disaster, it will renege on its promise to cut emissions by a quarter by 2020, compared with 1990 levels, and will instead increase emissions by 3% by that date. Australia’s new government has also called its existing emissions-reduction commitments into question.

Kuba Gogolewski, of the CEE Bankwatch Network, which was also involved in the coal financing research, said: “While policymakers are far too slow to regulate the mining and burning of coal, banks are speeding ahead with investments that are totally inconsistent with a stabilised climate.”